Forced arbitration denies justice to victims of fraud and discrimination

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Forced arbitration turns dispute resolution into a privatized system of dispute suppression that is supplanting our justice system.

Imagine that the Twins have just won the pennant and are going to play the Chicago Cubs in the World Series. But the rules have changed. All of the games will be played at Wrigley Field. And there are new umpires, hired and paid by the Cubs. With rules like that, the Twins wouldn’t stand much of a chance.

Nan Aron

Thanks to bad decisions by the Supreme Court and to unfair corporate practices, Americans are facing the same kinds of rules. But this is no game. They may face those rules when they’ve been defrauded by a business or discriminated against by an employer. Fortunately, this is one problem Congress can solve — and Sen. Al Franken, D-Minn., has introduced legislation to do just that.

At the root of these injustices is forced arbitration. This practice turns dispute resolution into a privatized system of dispute suppression that is supplanting our justice system and letting corporations ignore laws that protect consumers and workers.

Public pressure forced General Mills to back down and rescind a sweeping forced arbitration clause for anyone using the company’s website or taking advantage of a promotional offer. But that’s the exception. Odds are you’ve signed at least one contract with a forced arbitration clause in the fine print. They are showing up everywhere, from credit-card contracts to cell phone terms of use.

You can’t go to court

Under forced arbitration, if a big business cheats you, you can’t go to court to stand up for your rights. Instead, you go before an arbitrator often hired — and paid — by the company you think cheated you. One study found they rule for big business 94 percent of the time.

And that’s not the only reason the odds are against you in forced arbitration:

• Filing fees often are higher in arbitration than in court; that can discourage individuals from suing, particularly over relatively small dollar amounts.

• Rules of discovery are fashioned by the arbitration firms and the businesses that hire them, which affects how much information you can obtain from the firm that you think cheated you.

• It’s almost impossible to appeal an arbitrator’s ruling.

• Arbitration clauses generally prohibit class-action suits. When millions are cheated out of relatively small amounts per person, it isn’t feasible for each one to go through arbitration to get the money back. The only hope for justice, and the only real deterrent to fraud, is a class action.

But in case after case, the Supreme Court has upheld forced arbitration. That’s consistent with a recent study finding that five current justices rank in the top-10 most pro-business justices to serve in the last 65 years — and Chief Justice John Roberts and Justice Samuel Alito rank first and second.

Spreading to employment contracts

The Consumer Financial Protection Bureau may bar forced arbitration in consumer services contracts. But forced arbitration, and with it the ban on class actions, is spreading to employment contracts, threatening workers’ ability to sue over race, sex or age discrimination and other workplace injustices.

The rights protected by some of our most treasured statutes hang in the balance. The Civil Rights Act of 1964 and the Age Discrimination in Employment Act are among the landmark laws placed at risk when powerful corporations and employers can opt out of them by forcing consumers and employees into arbitration.

Forced arbitration also is a women’s rights issue. Laws guaranteeing equal rights for women — such as the Pregnancy Discrimination Act, the Family and Medical Leave Act and the Lilly Ledbetter Fair Pay Act — also are undermined.

But there is a solution: The Arbitration Fairness Act, introduced by Sen. Franken, would bar forced arbitration in employment, antitrust and civil-rights cases as well as consumer disputes. It would reopen the courthouse doors to millions of Americans. In other words, it would put real umpires back on the playing field.

Nan Aron is president of Alliance for Justice, a national association of more than 100 organizations committed to progressive values and creation of an equitable, just, and free society. AFJ has more about forced arbitration at http://bit.ly/190es31.